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Deposit Operations Audit Program PDF
Deposit Operations Audit Program PDF
Section A: Confirmations
Audit Objectives
To determine that:
Principal and interest accrual accounts accurately reflect the bank's liability.
Customer deposit account balances are accurately recorded.
Audit Procedures
Section B: Reconciliations
Audit Objectives
To determine that:
Reconciliations are properly completed on a recurring basis for all balance
sheet accounts and internal DDA accounts related to deposit operations and
correspondent banks.
Liabilities are recorded in the proper period.
Audit Procedures
1. Select account reconciliations for asset accounts over $XX, all liability
accounts, and all internal DDA accounts. Review and test the reconciliations as
follows:
2. For the remaining accounts not tested, select all general ledger suspense and
in-process accounts:
Determine that principal and interest accrual accounts accurately reflect the
bank's liability.
Determine that customer deposit account balances are accurately recorded.
Test reconcilements in accordance with attributes described in No. 1 above.
Age all items that make up the account balance and determine the reason for
any items more than __ days old.
Suspense Account Definition: A balance sheet account used to post transactions that
have not cleared due to timing differences or to temporarily post items pending a
decision of final treatment.
4. Review management's process used for writing off stale items more than five
years old. Test large or unusual items.
5. Obtain a copy of the most current Federal Deposit Insurance Corporation
Improvement Act (FDICIA) document on file and determine whether the
document contains the necessary financial accounting controls disclosed to
comply with FDICIA requirements.
6. Summarize the results of testing; conclude as to whether the audit objectives
have been met; and render an opinion of the area.
Audit Objective
Audit Procedures
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Segregation of duties, including maintenance of signature cards, approval
and documentation for reactivation, input of status code changes, and review
of control reports showing accounts reactivated.
Review of applicable documents (e.g., checks or other documents where the
signature can be verified) to reactivate accounts.
System reports used to monitor reactivated accounts.
Access security to dormant signature cards and account listings.
3. Validate that inactive status changes automatically on the 180th day of inactivity
and dormant status changes automatically on the 730th day.
4. Summarize results of testing; conclude as to whether the audit objectives have
been met; and render an opinion of the area.
Audit Objectives
Audit Procedures
New Accounts
Customer's name.
Date of birth, if the customer is an individual.
Residence and mailing address. If the customer is a corporation or
partnership, review for principal place of business and mailing address.
For U.S. employees, a taxpayer identification number, such as social security
number, individual taxpayer identification number, or employer identification
number.
For non-U.S. persons, review one or more of the following: U.S. taxpayer
identification number; passport number and country of issuance; alien
identification card number; or number and country of issuance of any other
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government-issued document evidencing nationality or residence bearing a
photograph or similar safeguard.
Verification of the authenticity of identifying information. Individual: Unexpired,
government-issued photo I.D. or document specified in the procedures.
Corporation: articles of incorporation, government-issued business license,
or partnership agreement.
Verification that the customer names were checked against the Office of
Foreign Asset Control (OFAC) list.
File Maintenance
1. Determine and document the process for closing and purging zero balance
accounts from the system. Include the time period after which a zero balance
account is automatically purged from the system.
Obtain the system report that identifies closed accounts and determine
whether accounts are purged in accordance with established procedures.
Obtain the system report that identifies zero balance accounts and determine
whether accounts were closed and purged according to policy.
On-Line Entries
1. Review and document the process for making online entries. Include the
following information:
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How control is achieved to ensure authenticity (e.g., edit function,
identification of keyer.)
2. Review and document procedures for making changes to the CK, SV, and CD
product specs. Include the following information:
Audit Objective
To determine that unposted rejected items are reviewed and cleared on a timely
basis.
Audit Procedures
Audit Objectives
To determine that:
The required IRA customer plan agreement disclosures are provided to the
customer at time of account opening.
The bank is providing the required year-end disclosures to the IRS and the
customer.
The bank has adequate procedures for processing distribution payments.
Audit Procedures
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1. Review controls to ensure new accounts are properly established including:
2. Obtain a listing of new accounts opened within the past month, select a sample,
and test for the following:
Distributions
Ensure the appropriate payment election form and form W -4P are on file.
Recalculate the distribution amount to ensure the amount of tax withheld,
distribution amount, and distribution method agrees to the distribution
request form.
Ensure the total income tax withheld for all distributions was transferred to an
accounts payable account and subsequently remitted to the IRS within the
required timeframes.
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Regulatory Reporting
Audit Objective
To determine that assets and records are adequately protected from theft,
misuse, destruction, and misappropriation.
Audit Procedures
Audit Objective
Audit Procedures
1. Determine if system access levels within the department have been reviewed
annually in accordance with security procedures.
2. Select a sample of employees within the department and determine if access
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levels granted appear reasonable.
3. Summarize results of testing; conclude as to whether the audit objectives have
been met; and render an opinion of the area.
Section I: Interest Accruals
Audit Objective
Audit Program
Recalculate the interest accrued for an entire interest cycle. NOTE: Many
account types accrue interest daily, therefore the balance used in the accrual
calculation may change frequently.
Ensure the interest rate is in accordance to the bank's approved rate sheets.
Verify the accrual is in accordance to the deposit account agreement
disclosures.
Verify the interest was posted properly and accurately to the customer's
account.
3. Reconcile YTD interest paid, based on the deposit system reports, to the
general ledger. Investigate variances greater than 1 percent.
4. Summarize results of testing and conclude as to whether the audit objectives
have been met.
Section J: Escheat
Audit Objective
To determine that the bank's escheat process is in compliance with state law.
Audit Procedures
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Section K: Savings Transaction Limits
Audit Objective
To determine that transaction limits are monitored for savings and money market
accounts.
Audit Procedures
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